Of course, businesses are there to sell their services or products. You invest in your business anytime you import or export cargo. However, the fact that many companies do not take the initiative to ensure their shipment is a surprise.
Whether you import or export goods via ocean freight or air freight, freight insurance can help protect your cargo. Marine cargo insurance covers any damage or loss of cargo during transit. While not insuring your shipment can save you a few dollars up front, but freight demurrage charges may haunt you later. Here are a few reasons why not covering your cargo is a bad idea.
Expedite Your Cargo Release
Importers and exporters are sometimes required to post a cash deposit or bond to secure their cargo release. That may apply even if there was no damage or loss. However, purchasing a marine insurance cover passes the responsibility of expediting cargo release over to the insurer. General average refers to a standard principle where all parties share the loss equally if the vessel submerges or some goods get damaged in transit.
Lower Financial to Losses
Not all exporters are paid for their goods at the shipment time. Importers, on the other hand, can pay for all or some of their imports before they are shipped. Both the exporter and importer risk suffering a financial loss in case their goods are lost or damaged during transit.
Limited Carrier Liability Coverage
Carriers are, in most cases not responsible for damages or loss that may occur during transit. Carriers have a limited liability either by law or by the bill of landing even if they are accountable for any loss or damage. An exporter or importer will in most cases recover cents from a carrier in case of loss or damage.
Contractual Requirement
Some sales agreements obligate exporters to obtain cargo insurance to protect the interest of the bank and buyer. It applies to everyone exporting goods CIF and CIP. Transacting without marine cargo insurance only subjects the exporter to financial loss in case of damage or loss. Non-compliance with the sales agreement could lead to legal problems and loss of sales.
Gain Control over Your Insurance Terms
Dependence on the seller’s or buyer’s insurance has never been a viable option. Instead, carriers must prove that indeed they have purchased the insurance and that the valuation, terms, and limited provided are adequate to meet the needs of the buyer and seller. Resolving a claim filed by a foreign insurer, perhaps in a different language, can frustrate you and cost you a lot of time. You will undoubtedly be dealing with international courts in case the buyer files a claim against you.
Even reputable carriers admit that things can sometimes go awry. Obtaining an insurance cover could be worthwhile with all those parcels and boxes changing hands. The decision depends on your risk tolerance and the value of the package.
You should consider an insurance policy when shipping high-dollar items and electronics. Take the time to research and understand the applicable terms before buying shipping insurance. You can opt for a third-party insurance cover for additional payment options and fast payment.
